July 11, 2008

FT: Bike power without the pedals

Bike power without the pedals

The
first time two-year-old Niklas Mertens climbed on his father's handmade
plywood version of a children's bicycle and took a ride he attracted a
good deal of attention.

"People just gaped," says Rolf Mertens,
then a designer for a computer magazine, remembering the sight of the
toddler wheeling about in a pedestrian zone in Aachen, Germany. "They
had never seen a two-year-old zip around like that." Niklas's mother,
Beate, says: "He got on and took off. He only stopped for meals and
sleep."

The husband-and-wife entrepreneurs knew they had found a
winning idea that spring day in 1997. By summer they had named their
fledgling company Kokua (a nonsense term from Mr Mertens' youth that he
later learnt means "help" in Hawaii) and by October they were making
the Like a Bike - a pedal-less wooden two-wheeler that sparked a
revolution in the market for children's bicycles.

Their manifesto
was straightforward. Instead of putting toddlers on chain-driven bikes
with stabilisers, parents should introduce them to the tricky art of
balancing using a bicycle that asks riders to push along with their
feet and free-wheel when they can.

Demand for this type of
children's walking bike has become so big that bike-makers such as
Germany's Puky and Kettler as well as some big retailers have buried
their initial scepticism to make models of their own - causing more
than a few problems for the Mertens family.

German inventor Karl
Drais had first thought up an adult version, known as the "draisine" or
"dandy-horse", in 1817. Its rebirth as a children's craze began in the
1990s, when the German Bicycle Club began advising members such as Mr
and Mrs Mertens to take the pedals and crank off a kid's bicycle rather
than fit stabilisers in order to teach children how to balance.

Instead
of messing about with mucky, stubborn bicycle parts, Mr Mertens
reckoned he could just do what Drais had done - build a bike himself.
An industrial designer, he was also a member of a local woodworking
club.

"Woodworking had always been more than a hobby," he says.
"I had always been looking to make something we could market properly."
After past experiments with everyday objects such as salt and pepper
pots, he had come up with something novel.

Mr Mertens is proud of
his ingenuity, but says he made one mistake. "I was in a hurry and I
didn't think of filing a patent on certain technical solutions. Once we
were on the market it was too late." The oversight would return to
haunt him seven years later.

For a while all went well. Mr
Mertens quit his job and his brother, Alfred, was so taken with an
early prototype presented to his son that he joined the
husband-and-wife team. He later gave up his job as a teacher to work
for Kokua full-time.

In September 1997, the trio used their
savings to provide the then-statutory minimum capital of DM50,000 to
register Kokua as a limited company. They have since borrowed only
once, to secure bridge financing.

Their next problem was to find
a supplier capable of making the Like A Bike's wooden parts, bevelled
edges and all. Only one, a woodworking company in east Germany, dared
take on the challenge - but even it had doubts about its ability to
meet Mr Mertens' tough criteria.

"We had booked adverts in a
German trade magazine for October, November and December," Mrs Mertens
recalls. "The first ad had run, the first dealers were faxing us
orders, but we still didn't know whether we would get the parts we
needed."

As orders piled up, the east German supplier came
through. It and the suppliers of the wheels and the tyres began to
courier parts for 20 to 30 bicycles to the Mertens' Aachen flat every
week. That Christmas they sold 200.

"By 1998 we were making about
100 bikes a week," Mrs Mertens recalls. "It was not very cosy living
among all those parts and boxes. Everything that got delivered had to
be hauled up to the third floor, and every completed Like A Bike had to
be taken back down again."

A year later the company moved to the
first of two sites in Roetgen, Mrs Mertens' home town. "In 2003, demand
exploded," she says. "Word of mouth about our product had hit a
critical mass."

That year Kokua produced up to 700 bikes a week,
mainly for Germany. The Mertens will not disclose revenues but at such
an output, with an estimated wholesale price of about €100 ($160) per
bike, annual revenues would be heading towards €2m.

Soon after
the launch, US retailer Toys R Us tried to woo Kokua with an order but
was refused. Mr and Mrs Mertens felt distribution via specialised bike
retailers was the only way to ensure service quality and premium
pricing.

Competitors presented another problem. In 2004 discount
supermarkets began copying their ideas, even using wood. "In 2005, our
sales dropped," Mr Mertens says. "We were making no more than 200-500
bikes a week. The whole experience was very hard for us, not just
financially. Should we retaliate?"

They sued and settled one case
out of court and won another "three or four", as German competition law
to some degree protects innovative ideas even when they are not
patented. "Patenting certain elements of the construction would have
been a real help," Mr Mertens says. But, as the legal bills neared
€100,000, the Mertens saw they could not defend Kokua forever by going
to court, especially in foreign jurisdictions.

In 2005 they set
about diversifying their range, which now includes six models, and
started an export drive using foreign partners - Switzerland, the UK
and the US are their biggest markets. Today two-thirds of the 450 bikes
made each week are sold abroad.

Mr Mertens says he still gets
e-mails from China in which local manufacturers show off their walking
bikes and ask whether Kokua would like to co-operate. Amazon.com sells
a look-a-like for €40 - which is €110 less than Kokua's original.

But
he has become more sanguine about the issue. "We haven't returned to
2003 sales levels," he says. "But we're doing well." He has even
started to take on bigger rivals with a metal Like A Bike - and his
first pedal-bike may follow.

Freewheeling woodworking enthusiast goes with the grain

Rolf
Mertens used his experience as a designer and woodworking enthusiast to
create a distinctive, sleekly stylish children's bicycle.

Two
pieces of rounded plywood make up the main frame of the Like A Bike.
Seen from above, they form an A-shape that wedges a wheel at the back,
a saddle in the middle, and slots into the forks at the front. Mr
Mertens, a cycling fan in his 40s, admits to being a fan of the simple,
angularfurniture of Danish architect and designer Arne Jacobsen and
Finnish contemporary Alvar Aalto, both adept with wood.

Using
wood instead of metal was an "obvious choice", Mr Mertens says. He
could easily buy and work the material himself - although he soon
outsourced the cutting of the wood as his artisanal production line was
too slow.

Today, the wooden bike is assembled by employees of Kokua, the company set up by Mr Mertens, in a plant in Roetgen, near Aachen.

Comments

The manufacturing of all the parts and the cutting of the wood are in (Singapore). It is just assembled in Germany (Roetgen). Name: Kokua Holzspielzeug GmbH
Address: Rolf Mertens
Address: Schwerzfelder Straße 3
Pcode: 52159
City: Roetgen
Country: GERMAN